If the US goes into recession, what will be the effect on Indonesia?

Jakarta –

The threat of recession returns to worry the United States (SA). The potential for a US decline emerged after the rise of the Sahm Rule indicator.

Collect Guard, on Tuesday (6/8/2024) the risk of a recession appeared when the average unemployment rate increased over the past three months. July’s unemployment rate rose from 4.1% to 4.3%.

On the other hand, fears of a US recession have gripped world markets, triggering a stock market crash. The reason is that many investors across Asia, Europe and North America are selling their shares.

Is the US recession threat affecting Indonesia? DBS Bank’s Chief Economist, Radhika Rao, said that she did not predict that the US would suffer a recession. However, US economic growth is estimated to slow in the second semester of 2024 by 1-1.5%.

“Currently we do not predict but we will suffer from a slowdown in the second semester. American economic growth is still above 1%. However, if America slows down, economically it will not will have a very important effect,” said Radhika in a Group Interview with DBS Bank Economists, South Jakarta, Tuesday (6/7/2024).

He said that if US economic growth falls by 1%, Indonesia’s economy is estimated to slow by 15-20 basis points. In this way, it is possible that Indonesia’s economic growth could reach 4.5% by the end of 2024.

He also pointed out that in terms of trade and investment, Indonesia is more likely to China and several other Asian countries. China is currently overtaking the US in domestic trade and investment.

“China can also replace America and in our opinion, it is hoped that the impact can also be reduced while China’s recovery is still in line with plans to use advanced economic paths for growth,” he explained.

Then he explained the signs that the US was suffering a recession. This sign also applies to all countries in the world that are on the verge of collapse. First, sales in the retail sector tend to be uncertain. This refers to US employment data which shows that several companies are still adding new jobs.

Then, other data must also be considered, such as sales durable goods, sell houses, motorcycles or durable goods.

“Actually, it’s not that bad, just maybe not as big as expected. So, as long as they’re still adding manpower, that’s still going in. market Yes, that’s probably because it’s probably an excuse sell off first, to make a profit first, maybe,” he said.

(are/are)